Treasuries decline amid G-20 debate to bolster global growth

Treasury 10-year notes fell for the first time in three days as the Group of 20 nations debated ways to boost global growth, reducing demand for the safest securities.

Benchmark 10-year notes trimmed a weekly advance after a China’s State Information Center said Asia’s largest economy may rebound in the second and third quarters. Treasuries returned 0.7% this year through yesterday, according to Bank of America Merrill Lynch Index data, while the Standard & Poor’s 500 Index jumped 8.1%. Finance ministers and central bank chiefs from the G-20 are meeting in Washington.

“We are at expensive levels,” said Christopher Sullivan, who oversees $2.2 billion as chief investment officer at United Nations Federal Credit Union in New York. “Equities are up, suggesting there may be better sentiment on risk. That may present additional pressure for Treasuries.”

The U.S. 10-year yield climbed one basis point, or 0.01 percentage point, to 1.69% at 9:09 a.m. in New York, according to Bloomberg Bond Trader prices. The 2% note due in February 2023 fell 3/32, or 94 cents per $1,000 face value, to 102 3/4. The yield has fallen three basis points this week.

“Macro fundamentals still suggest that Treasury yields can be higher,” said Orlando Green, a rates strategist at Credit Agricole Corporate & Investment Bank in London. “The market will move to a more risk-on situation when it feels that negative shocks have diminished.”

The G-20 nations will affirm a commitment to avoid weakening their currencies to gain a trade advantage, according to a draft statement prepared for the two-day meeting and seen by a Bloomberg BNA reporter. Officials gathering in the U.S. capital will discuss the draft statement and changes may be made before its release.

China’s recovery is driven mainly by infrastructure spending and inventory adjustments by companies, Zhu Baoliang, head of the State Information Center’s economic forecast department, said at a forum in Beijing. The nation should stabilize money supply growth and loosen fiscal policy to boost economic growth, he said.